(Bloomberg) — Asian stocks were set for a cautious start after Federal Reserve meeting minutes hinted at an enduring bias for rate hikes. Treasury yields ticked higher and the dollar was little changed.
Australian shares were steady, while futures on Japanese equities slipped, after the post-Christmas rally drove the regional MSCI Asia Pacific Index to the highest since October. The S&P 500 Index nudged higher as the Fed was seen remaining patient in its approach to further hikes without ruling them out if economic growth picks up. The yuan climbed overnight as some analysts warned there’s little room for it to appreciate much further amid bets the authorities will keep the currency steady.
The rally in risk assets is showing signs of faltering with MSCI’s global gauge of stocks up about 15 percent since Christmas Day. Technical indicators, from closely watched moving averages to relative-strength indexes, signal that gains from here may be difficult to come by as investors look for progress from this week’s trade negotiations in Washington. Fed policy makers see 2019 marking the end of their balance sheet run-off, but not necessarily their interest-rate increases.
“What helped was the Fed acknowledging the global slowdown, the rise in policy uncertainty, and most importantly, that inflation is still going to struggle to have any upward thrust,” Joe Davis, chief economist and head of investment strategy at Vanguard Group Inc., told Bloomberg TV. “When you put all three together, there were no big surprises. But it is very revealing in terms of where the Fed sentiment is.”
Next up on traders’ watch lists is jobs data in Australia on Thursday and European Central Bank meeting minutes, followed by President Mario Draghi’s speech on Friday.
Earlier, the pound dipped as Fitch Ratings said it may cut the U.K.’s sovereign debt rating on uncertainty surrounding Brexit. Gold traded near the highest since May and palladium soared to a record as a shortage started to bite.
Here are some key events coming up:
Bank of Canada Governor Stephen Poloz speaks on Thursday; ECB President Mario Draghi speaks on Friday, the same day Reserve Bank of Australia Governor Philip Lowe gives parliamentary testimony.An Indonesian rate decision is due Thursday.
These are the main moves in markets:
The S&P 500 Index rose 0.2 percent. Futures were flat. Futures on Japan’s Nikkei 225 dropped 0.2 percent. Hang Seng Index futures earlier climbed 0.5 percent. Australia’s S&P/ASX 200 Index gained 0.1 percent.
The yen held at 110.82 per dollar. The offshore yuan was at 6.7189 per dollar after rising 0.4 percent. The euro was steady at $1.1344.The MSCI Emerging Markets Currency Index gained 0.4 percent.
The yield on 10-year Treasuries climbed one basis point to 2.65 percent.Australia’s 10-year bond yield slipped one basis point to 2.09 percent.
West Texas Intermediate crude gained 0.2 percent to $57.27 a barrel.Gold rose 0.1 percent to $1,339.28 an ounce.
–With assistance from Sarah Ponczek and Tian Chen.
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